16
QuizMultiple Choice

Trade Barriers

Question 16 • GA-GSE Personal Finance and Economics

Which best describes what a subsidy does?

Answer
A
It keeps the price of domestic goods relatively low.
B
It raises the price of imported goods.
C
It encourages the import of foreign goods.
D
It eliminates all taxes on domestic goods.

Explanation

A subsidy is financial support from the government to domestic producers, such as a payment or tax benefit. This lowers their production costs and helps keep the price of domestic goods relatively low. It does not directly raise import prices or eliminate all taxes.

AI-written and checked against the verified answer.

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